Executive on the space's evolution during 40-year stint
It’s no secret that the mortgage investment corporation (MIC) space has witnessed significant growth in Canada in recent years – and as a 40-year veteran of the sector, British Columbia-based executive Gord Wintrup (pictured) is better placed than most to comment on that evolution.
The industry veteran, who was inducted to Canadian Mortgage Professional’s Hall of Fame in 2021, started his MIC, Bayfield Mortgage Investment Corporation, during what he describes as “turbulent” times in the 1980s shortly after launching his own brokerage.
Its growth since then has seen administered mortgage volume swell to around $140 million, with the MIC space now operating in a markedly different environment than when Wintrup started out.
The space was much less stringently regulated at that time than it is now, he said, although full accountability and transparency were top of mind for Bayfield from the get-go.
“In 1984, there were hardly any rules for a MIC. We decided on our own will to have our financial statements audited – but there was no requirement for even an audited financial statement in those days,” he told Canadian Mortgage Professional.
Back then, the company was doing business as a largely friends-and-family operation, attracting familiar private investors before it began to expand beyond those horizons. Wintrup said its growth and experience had allowed it to weather the recent market turbulence, but said the outlook for smaller entities in the space is less sure.
“We just grew on our own. We now have our own exempt market dealer inhouse, [and] we’ll be going forward looking for additional capital as all MICs are,” he said. “It’s gotten to the point today with the regulations that we now face and the expenditures that go along with it, I don’t know how some of the smaller MICs can pay the bills at the end of the day.”
Wintrup said investor risk is multiplied for smaller, newer players, particularly when loans go sour and those investors lose money as a result. On the other hand, “with $140 million and a $500,000 mortgage that went sideways, we’re not going to get hurt,” he claimed.
What brokers need to know about dealing with MICs
Conservatism is the name of the game where Bayfield is concerned, according to Wintrup, with an acute understanding of the need for care and precision when managing others’ money.
“We do small construction from time to time – but primarily it’s 95% residential,” he said. “We look at where the banks are. If it’s in the middle of nowhere and the banks aren’t there, we’ll still look at a deal there.
“But we really look at it like if they’re not there, why should we be there with someone else’s money? That’s just our niche.”
The company lends mainly in British Columbia’s interior and Vancouver’s Lower Mainland and Island, with smaller villages dotted across the province also in its portfolio.
According to Kyle Williams of First Circle Financial, the Canadian housing market is experiencing a resurgence in confidence after a period of uncertainty driven by fluctuating interest rates.https://t.co/aL6PW84zVy
— Canadian Mortgage Professional Magazine (@CMPmagazine) April 26, 2024
What should mortgage brokers be keeping top of mind when transacting with a MIC? For Wintrup, due diligence is essential – as is understanding that the offered rate is not necessarily the most important component of a deal.
“What happens on renewal – and if the market doesn’t change, will the rate be the same? In our case, yes, it would be,” he said. “What about the renewal fee? Well, there will be hundreds of dollars – not thousands of dollars like some of the others have done. You owe it to your client.
“It’s not just the best rate – it’s, ‘What type of clauses are in the mortgage? Are we going to turn around and pounce if you fight the lender?’ If the borrower does the right thing and says, ‘Hey, can you hold my payment on the 15th? I can’t pay it until next month,’ OK, fair enough -we’re not going to penalize you. Just set it aside. Some will pounce – so you don’t want to put your borrower in that situation.”
What’s in store for the future of Canada’s MIC space?
Much has been made of the uncertainty facing the sector amid the current economic storm clouds – but MICs with the right approach and correct temperament will be able to weather these times, according to Wintrup.
“I learned a lot from the 1980s,” he said. “I was right on the frontlines, in the fire. The 1990s – same thing. Coming into COVID, I couldn’t see where we were heading, no-one else can see where we’re heading. We cut back on our lending advances long before anyone else. Our delinquency rate today is very palatable. It’s in line with what we’ve always predicted. We’re doing just fine.
“I think if you’re running a MIC or you’re running a brokerage, put a good team around you and trust them to do their jobs. We have people in mortgage that are way better at it than I am; we have underwriters that are as good or better than I am. I’m kind of a driver of the team bus. My job is to look out and look ahead – and if there’s a pothole in the road, well, I better steer the bus around the pothole, but let good people do their job.”
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